The city’s buoyant property market continues to attract investors, property owners, tenants turned into homeowners and new tenants alike, reinforcing Dubai’s position as a global real estate hub.
After analyzing last month sales performance, we continue to look at the demand drivers for rental properties, which may suggest a favorable environment for investment, sustained by the shift in Central Banks policies towards lower interest rates.
1. Overall performance
Overall average rents on new contracts for apartments, villas and commercial properties in Dubai, have seen a general downward trend since August, with a drop in October to 72,000 AED, however still 7% higher than in the beginning of the year in Jan.
In October we notice the most significant month-on-month decrease in value this year (-4%)
2. Breakdown of rents values by property types for new contracts
Apartments 16.9% increase YoY
Villas and Townhouses 4.2% increase YoY
Commercial properties -20.1% decrease YoY
Property rents performance for apartments overall, in Dubai
-4% drop last month, on annual rent value vs previous month, for new contracts for apartments, to 67,000 AED, however still 12% higher from January.
3. Popular Areas
Let's look at the current trend for new contracts for apartments across various segments, including affordable, mid-tier, and luxury properties in the main areas in the city:
Beach main areas:
We can easily observe Palm Jumeirah price premium, where Studios are renting at similar value with 1-Bedroom in Dubai Marina, and the same goes for 1-Bedroom on the Palm at similar value with a 2-Bedrooms apartment in Marina.
City main areas:
In Downtown, Business Bay area, there is a significant gap between 1-Bedroom or 2-Bedrooms units, were Downtown post a higher premium for these types of units.
Mid-Tier Apartments on new contracts: rental prices for 1-bedroom, are averaging at AED 67,000 per year in Jumeirah Village Circle (JVC) which continues to attract tenants looking for affordability and community facilities, with a 15.5% YoY increase in rental prices
Affordable Apartments on new contracts: on the lowest side of the spectrum, International City, remains the top choice for cheaper apartment rents, with average yearly prices for studios at AED 29,000 and one-bedroom apartments at AED 40,000
Villa Rentals on new contracts:
Affordable Villas: Dubai South average yearly rents for four-bedroom villas was sitting at AED 142,500 in October.
Mid-Tier Villas: DAMAC Hills has seen a demand increase in rental prices, with three-bedroom villas averaging AED 297,000 per year representing 14.2 % increase compared to September.
Luxury Villas: Emirates Living area remains one of the top choices for luxury villa rentals, with prices for four-bedroom villas ranging from minimum AED 440,000 per year.
4. Demand and Supply Dynamics
Back in 2019 it was announced the formation of the Higher Committee for Real Estate Planning in Dubai chaired by His Highness Sheikh Maktoum bin Mohammed, with the aim to achieve a balance between supply and demand.
According with the latest available numbers 22,010 units are expected to come into the market this year, while currently have been completed 22,590 units in the city.
5. Trends in Rental preferences
Tenants should be aware of the rising rental costs and plan accordingly. It is advisable to explore various neighborhoods and property types to find the best fit for their budget and lifestyle.
Conclusion
October 2024 has been a landmark month for Dubai’s real estate market, with record-breaking sales transactions and rising demand on rental properties. For property investors and owners, the current market conditions present lucrative opportunities which can be uncovered by a thorough analysis into asset class, communities and projects.
For more detailed insights, stay tuned for our next monthly report to keep abreast of the latest market developments.
Source: DXB Interact
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